contingency theory

...strategists ""observe the winners and look for what makes them win. The most basic method in economic sociology [and organization theory] is to observe large numbers of firms and look for what explains differences in their behavior . the new strategies they choose are shaped by public policy, imitation, network position, power, and historical happenstance"" (2000: 2). As a result, studies of the interaction among strategy, structure, and performance have become comparatively rare in organization theory.

The Triumph of Antimanagerial Theory?
Some lament this neglect of performance as an egregious wrong turn by American scholars beginning somewhere in the mid-1970s, a departure from the promising open systems/contingency theory consensus. Donaldson (1995) summarizes the various strains of contingency theory in terms of the SARFIT (structural-adaptation-to-regain-fit) model. In an open systems world, environments create requirements for organizations that their managers address in part by adopting strategies. These strategies in turn create contingencies-size, technology, level of diversification, or others-for which some organizational structures are better suited than others. When managers of an organization find themselves with a structure that does not match its contingencies (e.g., because these contingencies have changed), their organization's performance suffers, and they endeavor to change its structure to one with a better fit, to improve performance. In short, fit affects performance; a change in the contingency variable (technology, diversification, etc.) causes misfit; misfit leads to structural change; and change in structure leads to new fit, which restores performance. Yet just as structural contingency theorists had arrived at a plausible model of how organizations interact with their environments, with useful implications for managers (e.g., Burns and Stalker, 1961; Lawrence and Lorsch, 1967; Thompson, 1967), Donaldson and similar critics were dismayed to see American ""antimanagement"" theorists respond with paradigms viewing managers as Machiavellian (Pfeffer and Salancik, 1978), lemminglike (DiMaggio and Powell, 1983), perverse (Meyer and Rowan, 1977), or unable to overcome inertia in order to make sensible organizational changes (Hannan and Freeman, 1977). These critics suggested that delight in novelty had apparently overcome a commitment to cumulative knowledge building founded on the sold rock of contingency theory (Donaldson, 1995).

Source: Scott & Davis, 2007, p 311